Aligning HR to the CEO Growth Agenda

By Donald Laurie and Richard Lynch 

Throughout much of the 1990s and early 2000s, CEOs were rewarded for cost reduction and cost
containment. To compete in the global arena, Boards demanded dramatic improvement in efficiencies.
Companies such as General Electric, Motorola, and Allied Signal fueled the trend by reporting 10 times or
higher ROIs from their Six Sigma programs. With a clear focus on the bottom line and tantalizing ROIs,
companies invested heavily to get lean, outsource nonstrategic work, improve quality, and introduce better
products.
The new CEO agenda, while not losing sight of the bottom line, has shifted to the top line. Covering the views of
658 CEOs from more than 40 countries, the 2006 Conference Board’s Sixth Annual Survey 1 found that:
In the United States, the top future challenges will be how to sustain and generate steady top-line growth.
Profitable growth and product innovation were also high up on the list.
• CEOs based in Europe are most concerned with speed, flexibility, and adaptability to change, followed
by profit growth and sustained and steady top-line growth.
• Spurring company growth has become a major CEO concern in Mexico and South America.
• CEOs of Asian companies are more concerned with stimulating innovation, acquiring top talent, and
other people issues. Half of CEOs in Asia report that inspiring innovation is their greatest concern.

HR demonstrated in the earlier period that it can be a strategic player in efficiency initiatives by sourcing work
and talent for better leverage, outsourcing routine work, and moving some talent costs from fixed to variable.
For HR to remain a strategic partner in the new, growth-driven future, it must answer the call to support and
systemize innovations that achieve the growth goals now topping the corporate agenda.
This next phase requires significant retooling, according to the HRPS/i4cp 2007 survey “HR’s Role in the CEO
Growth Agenda.” This retooling and reinvention must come most dramatically in the areas of leadership
development and organization design. 2 The survey highlighted several issues of concern to most HR leaders,
including:
• Helping leaders to frame the growth challenge for the organization.
• Developing new learning programs that lead to clarity of roles and responsibilities in managing growth
and new executive team behaviors; and
• Designing and staffing the growth-related organization.

The Growth Gap

Growth, in many ways, is its own reward: Growth attracts talent, creates the capital to grow faster, and can
transform the market valuation of a company. Yet many companies have a significant enterprise growth gap:
the difference between the sum of the forecasted business units’ growth goals and the overall enterprise
target. In other words, it is the difference between what the core businesses can deliver and the expectations

1 The Conference Board’s CEO Challenge Survey 2006 (New York, 2006).
2 HRPS and Oyster Survey of Role in HR in the CEO Growth Agenda.
 Aligning HR to the CEO Growth Agenda

of the CEO and top management team. This is generally described as a financial shortfall, but the root cause is
a gap in the enterprise’s capabilities and processes to identify and exploit new opportunities beyond the reach
of the core businesses. For example, in a $10B multi-business chemical company, its core businesses were
able to generate 5 percent growth through current know-how, but the board of directors and CEO desired 10
percent growth in order to increase stock price and market capitalization. The size and reach of generating new
businesses to close the $500M revenue gap made it the prime responsibility of the CEO and Executive Team
to create new families of products and services.
Almost 60 percent of
respondents to the HRPS/i4cp Many companies have a significant enterprise growth gap:
survey list the primary objective the difference between the sum of the forecasted business
for their organization as organic
units’ growth goals and the overall enterprise target.
growth (28.2% say this will come
through new product and service
platforms). Yet most companies believe and act as if this will be achieved by doing better at and more of the
same things. Oyster International research has found, however, that good strategy, understanding of markets
and technologies, and analytical support will not insure that the growth gap will be closed. Instead, the most
significant elements of success are found in the answers to the following questions:
1. Is there an enterprise growth gap?
2. Is the leadership team unified around growth goals and the path to them?
3. Is the organization designed to achieve the growth that has been identified?
4. Is the source of growth clear?
5. Can the innovation process deliver new businesses that will achieve the growth goals?

HR will be aligned closely to the CEO growth agenda only when it is actively involved in driving the organization
to “yes” answers for these questions. This will require HR to adapt by adding the development of leaders who
can identify and execute new ideas in new spaces and the realignment of the organization systems and
structures for growth to its strategic competencies. The rest of our article details how HR can make these
required and rather dramatic changes so it becomes a full partner in creating new, substantial growth.

Closing the Growth Gap

After studying 24 high growth companies such as Procter & Gamble, UPS, and Medtronic, Oyster International
identified two major success factors in closing the growth gap. 3 First, these companies were successful in
creating New Growth Platforms (NGP): material new families of products and services typically outside the
reach of the current businesses. Opportunities lay within domains at the intersection of technology, trends, and
customer dynamics.
Explorations into these domains are guided by the company’s core capabilities. Unlike new products, NGPs are
the kernels to create new strategic opportunities that leverage company size and position. (See Table 1 for
examples of NGPs.)
Second, the companies exhibited a common set of characteristics in innovation, leadership, and organization
design to sustain the flow of NGPs. These characteristics include:
1. A credible chief growth officer is in charge of a new unit;
2. A recognition that the team is more important than the idea;
3. NGP units are independent units and with strong interdependencies to the core businesses; and
4. The process for screening, selecting, and building NGPs is disciplined, systematic, and repeatable.

3 Laurie DL, Doz YL, & Sheer CP (2006). “Creating New Growth Platforms,” Harvard Business Review, May.

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 Aligning HR to the CEO Growth Agenda

Herein lays the opportunity for HR to be a player in the company growth agenda and not just sit on the
sidelines. HR can help design and build a more agile organization capable of identifying, designing, and
iterating a pipeline of NGPs. In other words, HR can help create a culture and organization that is innovative
and highly disciplined.

Table 1. Sample New Growth Patterns

Company Description Results

UPS Domain: Service and repair $1 Billion business unit in 2005

NGP: Service Parts Logistics
UPS’ capabilities in providing the physical
connection between buyer and seller almost
anywhere in the world, when juxtaposed with PC
customers demanding same-day repair, led UPS
to enter the computer repair business (with the
acquisition of missing capabilities of such PCB
repair)

Apple Domain: Portable music
NGP: iPod
Known for stylish, elegant design, great user
interface, cool software, and intimate knowledge
of its youthful customer base, Apple projected
these core capabilities into the portable music
domain, reshaped the digital music business with
iTunes, and is now extending into the consumer
electronics market.
Apple split into separate iPod and
Macintosh divisions in 2004 just
three years after the iPod was
introduced.
Apple’s portable media players
account for 71.5 percent of the
market in 2007.

Analog Devices Domains: Automotive safety, musician’s studio The majority of 2005 revenue
NGP: Accelerometer/iMEMS from micro-machined products
was derived from accelerometers
A company with strong capabilities in making
used by automotive
small devices (micro-machinery) and analog and
manufacturers in airbag
digital signal processing, Analog projected these
applications (about 8% of total
capabilities into new domains such as automotive
revenue). However, revenue from
(motion devices for airbags in automobiles
consumer and industrial
opened up by new regulations and customer
customers is increasing as Analog
demand for safety) and music (“Hot Hand,” a
develops products using this
device for a guitarist to manipulate sound effects
platform for applications in new
without the need for pedals).
end markets.

Before turning to HR’s role in innovation, leadership, and organization design within the context of NGPs and
cultural change, we need to explore the fundamental difference between core business growth and new growth
platforms.

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 Aligning HR to the CEO Growth Agenda

Core Business versus NGP Growth

Many high growth companies have discovered that NGP processes and leadership work on NGPs are
fundamentally different than in the core business (see Table 2). Core business growth typically demands
skilled operators who are aligned around strategy and are accountable for a share of market growth and cost
containment. Their horizons are the next quarter and next budget cycle.

Table 2. Core Business Growth versus NGP

Growth Component Core Business Growth New Growth Platforms

Agenda owned by CEO and

Leadership Agenda owned by the Line Managers
Executive Team

Share of market growth and cost

Organization Design Closing the enterprise growth gap
containment

Ecosystem linked to your unique

Domain Identification Current markets
portable and valuable capabilities

Enhancing product and geographical Creating new families of products in

Platform Innovation
adjacencies new spaces

ª ª
Analytics Insight

Key attributes of good operators include:

1. A good knowledge of current markets and key customers;
2. A highly analytical nature;
3. Ability to run lean operations;
4. Experience in product enhancements and product cost reductions; and
5. Ability to expand into new geographical areas

NGPs, on the other hand, demand a different breed of leader — a business builder. Leaders here must be
constructively dissatisfied; they turn things on their sides and see how things could work in a whole different
way. Their horizon for building NGPs is the next three to four years. They rely on insight and intuition, not just
the numbers. They see things others do not see and make connections others cannot make. Their passion is
identifying and executing growth platforms — families of products and services in new spaces. Key attributes
here are:
1. An agile mind;
2. Curiosity;
3. Willingness to immerse oneself in the customers’ (or potential customers) worlds;
4. Experimentation; and
5. A greater sense of urgency and risk taking.

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If the company cannot meet its growth goals through product enhancements, geographical adjacencies, or
other core business growth strategies, it must move to NGP as a source of growth. Yet as the HRPS/i4cp
survey points out, there is little experience in HR or the leadership ranks to navigate in these new spaces. For
companies with an enterprise growth gap, there are many adaptive challenges for HR. Adaptive challenges
arise when there is limited experience in thinking through new problems that often challenge deeply held
beliefs. 4

Innovation and HR’s Role

There are three readily identifiable forms of innovation:
1. Process innovation is the sweet spot of business process management and Six Sigma professionals.
Process innovation is concerned with efficiencies and agility in the current businesses. In recent times,
HR helped to create high performing organizations by investing in people and training for process
improvement, and realigning systems and processes to reward process innovation, elimination of
variances, and reduction of time and waste throughout the entire supply chain. This work improved
efficiency, responsiveness, quality, and bottom-line performance (earnings growth).
Process innovation is often driven by the COO and supported by HR in building an improvement
culture. GE Capital’s Six Sigma program is a case in point. Led by Mike Markovits, then head of GE
Capital’s Center of Learning and Operational Excellence, and in concert with Corporate Quality, the HR
team developed company-wide improvement team training applied to real process problems. It also
developed toolkits, established a project office to track savings and improvements, and realigned the
company’s incentive system to make Six Sigma part of the day-day-job. Without a green or black six
sigma belt, an employee would not see much upward mobility toward the leadership ranks.
2. Product innovation for which innovation refers to new product development and extensions that occur
within the sphere of existing business units. New product introduction contributes to the top line
growth rate and builds or sustains market leadership. This kind of innovation is driven by the head of
marketing, the CTO, and R&D. Who actually takes the lead in these activities tends to be company
specific. HR has participated here by identifying, training and keeping the best talent suited for
creating new and improved products. Many of the Center for Quality of Management member
companies, such as Analog Devices, Mercury Computer Systems, and Haemonetics Corporation, cite
“voice of the customer” and “concept engineering” as keys to analyzing what customers need and
want to solve their problems. HR plays a vital role in the customer research, and in creating methods
and education for transferring these competencies to key contributors and design teams.
3. Platform innovation is shown in Figure 1. Platforms are a foundation that spawns multiple products
and/or services that, by themselves, are eventually the size of a business unit. They are a broad but
well-defined approach to customer needs in the form of a business solution. Platforms are a source of
sustained profit potential that is scalable and replicable. These innovations result from identifying new
domains created at the intersection of enablers or “unstoppable trends” and customer dynamics;
linked to an essential set of core capabilities we call the platform logic: those capabilities that are
unique, valuable, and portable. When properly executed, this work of creating new growth platforms
builds a stream of material new businesses in a disciplined and predictable way. This is the
responsibility of top leadership and places new demands on HR to create new social networks, new
learning agendas, and new structures and processes to foster significant organic growth.

4 Heifetz RA & Laurie DL (2001). “The Work of Leadership (HBR Classic),” Harvard Business Review.

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In the area of platform innovation and development, five principles have emerged from our research 5 as key to
the development of NGPs in large global companies:
1. Selecting a chief growth officer (CGO) who typically reports to the CEO. The CGO is usually an
accomplished general manager and frequently a future CEO candidate. The CGO is a business builder
who can mobilize resources to move into new spaces with new platforms and establish the
organization capabilities to develop
and execute a pipeline of new growth Figure 1. Platform Innovation
platforms to close the enterprise New Domain
growth gap.
2. Recognizing that the NGP team is more
important than any individual idea.
Often ideas arrive underdeveloped or Customer
unrecognizable as potential successful Enablers Dynamics
(i.e., new or converging (i.e., unmet, unserved
businesses. The work of the team is to technologies, or latent customer
regulatory pressure, needs; in markets
identify, screen, and shape multiple social change, etc.) “where we can make
a difference”)
ideas into NGPs. Profiling and carefully
selecting the team is important work
for the CEO and HR leader.
3. Creating the conditions that allows the Capabilities Hunting
NGP team to be both independent and New Growth (i.e., identifying and Ground or
Platform assembling technical, Opportunity
interdependent. The unit must operate organizational and process Space
capabilities —”how we can
independently in pursuing its mission make a difference”)
of developing and incubating NGPs.
The unit will typically have different
time horizons and often a more risk- SOURCE: Donald L. Laurie, Yves L. Doz and Claude P. Sheer; “Creating
New Growth Platforms” (Harvard Business Review, May 2006).
taking culture than the core
businesses. At the same time, it must be interdependent with other units in the corporation. This is
essential to achieve alignment and have access to marketing and technology resources needed to
plan for and build NGPs.
4. Addressing governance issues, decision making, and guaranteeing financial independence. Typically
in successful companies, investment capital—for the NGP unit and the new products and businesses it
identifies—is separated from the budget and operated as a discretionary enterprise growth fund. The
fund investments are authorized by an investment committee or representative group within the
Executive Team office: often the CEO, CTO, and CFO.
5. Systematizing the NGP creation process. Carefully articulating the process of platform innovation,
development, execution, and related activities is important, not only for ensuring that NGP creation
becomes a continuous activity, but also for building company-wide commitment to the idea and
importance of NGPs. Unless the activities involved in creating platforms are well defined, talented core
business managers will never buy into the idea that NGP innovation needs to be separate from the
incremental innovation that their units already undertake.HR has much to contribute in helping to

5Harvard Business School, INSEAD, and Oyster research project: The CEO Agenda and Growth. The research
involved 24 CEOs and their chief strategy officers, chief technology officers, and selected line managers from
companies including: Procter & Gamble, UPS, Johnson & Johnson, Thermo Electric, Corning, Becton
Dickinson, Raytheon, Timken, Cabot Corporation, Eastman Chemicals, Inverness Medical Innovations, Sealed
Air Corporation, Nokia, ST Microelectronics, and Computer Associates.

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 Aligning HR to the CEO Growth Agenda

select the CGO and the NGP team in terms of job descriptions, candidate profiling, and succession
planning. They can be a major player in creating the conditions (structure, systems, and policies) that
allow the NGP team to be both independent and interdependent. All too often, HR policies aligned to
the core businesses undermine NGP development. For example, at a large health care company
seeking new venture growth, leadership compensation encouraged short-term behaviors and
discouraged risk taking, exactly the opposite of what was needed. Effective HR would develop relevant
compensation, metrics, and behaviors based on the growth goals.

HR’s Role in NGP Leadership

Although 60 percent of HRPS/i4cp survey respondents said their companies do not differentiate core business
growth from new growth platforms, high growth companies such as Medtronic, UPS, Inverness, and P&G
differentiate to a great extent. We have observed that CEOs often lead these efforts, and they start with
leadership’s role, work, and value added:
1. NGP work is the operational responsibility of the senior leadership;
2. NGP requires a change in the management process of NGP development from budgeting to investing;
3. Value is created through intense focus on customer problems and solutions that lead to NGPs;
4. Leaders take an external perspective on opportunities by making a personal investment in learning
about emerging markets and technologies through contact with entrepreneurs, venture capitalists,
academics, and other leading-edge thinkers operating in the targeted domain;
5. A platform logic (capabilities that are unique, valuable, and portable) is used as the foundation for
growth;
6. Deeply held beliefs are examined to determine whether they support or conflict with the development
of NGPs.
Such changes are not without serious risks:
1. If the CEO and Executive Team manage investments in NGPs in the same ways as core business
budgeting, NGPs are unlikely to emerge or succeed;
2. Failure to identify and agree on domains can cause conflicting development agendas between the
core businesses and the NGP team;
3. If poor understanding and commitment exists among the Executive Team and leadership ranks, new
growth ideas will consume resources without delivering results;
4. If the CEO and Executive Team do not invest enough time on NGPs and learning, a pipeline will not
develop to close the enterprise growth gap;
5. Failure to identify the platform logic will lead to inappropriate platform identification and inefficient
investment decisions.
These are systematic problems and not a ranked list. They are separate and distinct from conventional growth
challenges and are addressed through leadership development.
HR’s new strategic role includes working with the CEO and the leadership team to address these risks by:
1. Defining the new work required, the risks involved, and the new learning essential to become a
successful investor and milestone manager both (individually and collectively);
2. Driving accountability for growth and innovation into compensation, measures, and competency
models;
3. Building a coalition of support for NGPs, including the external network;

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 Aligning HR to the CEO Growth Agenda

4. Providing opportunities for the company business builders and entrepreneurs to explore the
ecosystem—technologies, trends, and customer dynamics—as part of high potential programs; and
5. Understanding and addressing the adaptive challenges and points of resistance.
Traditional HR work thus needs to be applied in new ways. A framework representing HR responsibilities and
accountabilities related to screening, selecting, and building NGPs is in the table below.

Table 3. New Accountabilities for HR in Supporting NGPs

Helping leaders to frame and communicate the growth challenge for the organization.
Redefining the role, work, and value added of top leaders in the work of developing new
HR Strategy growth platforms.
Identifying and aligning HR systems to the NGP goal.
Framing and addressing major issues and adaptive challenges.
Compensation Developing relevant NGP compensation, metrics, and behaviors based on the growth
and Benefits goals and time horizon for the work and deliverables.
Helping to select the chief growth officer and the NGP team in terms of job descriptions,
candidate profiling, and succession planning.
Staffing Differentiating the skills and attitude required of managers responsible for delivering
predictable, core business results and business builders responsible for conceiving and
assembling NGPs.
Designing and staffing an organization with a mission of developing new growth platforms.
Designing and building a more agile organization capable of identifying, designing, and
iterating a pipeline of NGPs. In other words, HR can help create a culture and organization
that is innovative and highly disciplined.
Organization
Structure Creating new social networks, new learning agendas, and new structures and processes
and to foster significant organic growth.
Development
Creating the conditions (structure, systems, and policies) that allow the NGP team to be
both independent and interdependent.
Understanding points of resistance in the shift to new growth platforms at different levels
in the organization.
Developing new learning programs that lead to clarity of roles and responsibilities in
building new growth platforms and new behaviors among the executive team, NGP team
and other key players.
Developing leaders who can identify and execute new ideas in new spaces and realigning
the organization systems and structures for growth to its strategic competencies.
Training Defining the new work required, the risks involved, and the essential new learning to
become a successful investor and milestone manager (both individually and collectively).
Building a coalition of support for the NGPs, including the external network.
Providing opportunities for the company business builders and entrepreneurs to explore
the ecosystem — technologies, trends, and customer dynamics — as part of high potential
programs.

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After identifying new growth opportunities in Homeland Security, Information Assurance, and Government
Services, Lockheed Martin CEO Bob Stevens partnered with Marilyn Figlar, VP of Leadership and Organizational
Development, to address the leadership development challenges related to exploiting these opportunities. The
challenge was exacerbated by company demographics pointing to a 30 percent turnover during the next
decade. Stevens and Figlar developed a new leadership development program called “Full Spectrum
Leadership” to foster growth though performance and the right behaviors. Central to the program are the
development of five attributes:
1. Shape the future: Creative thinking, what could be new markets, new customers;
2. Build effective relationships: New networks both inside and outside the company;
3. Energize the team: Welcome diversity for new ideas, mentoring, lifelong learning;
4. Deliver results: Turn strategy into reality, view adversity as the mother of innovation; and
5. Model personal excellence, integrity, and accountability: the foundation to the preceding attributes.
For a company that lives in the details, Lockheed Martin requires exquisite discipline and, at the same time,
the need to open the aperture for “out of the box” thinking for some leaders. This paradox is being tackled by
helping leaders approach innovation and growth in a disciplined manner. Stevens, a former COO who does not
like putting fixed assets on the books, has invested in a new Lockheed Martin leadership development facility
to develop leaders who get the right results in the right way, while building networks to spur further innovation.
Dick Antoine, chief HR officer at P&G, echoes Stevens’ concerns about growth and leadership. Antoine notes
that P&G revenue growth has doubled in the last six years. Today the biggest obstacle to continued growth is
leadership capacity. Antoine believes you have to hire the right people in the first place. P&G, which gets more
than one million job applications each year in the United States alone, has three Ph.D. psychologists on staff
who oversee a rigorous testing process. Success drivers include three key leadership attributes for NGP
leadership: the willingness to embrace change, a knack for collaboration both internally and externally, and the
ability to execute a plan. 6
Investing in leadership development is a part of institutionalizing organic growth capability. Another key
component is aligning the rewards systems to the growth agenda. The GE “ecomagination” initiative drives
accountability for growth and innovation into the organization by tying senior executive compensation to ability
to generate new breakthrough ideas. GE also has aligned its famous succession planning and talent review
programs to identify and evaluate new behaviors that drive ecomagination top-line growth. These are beginning
to look a lot different from Jack Welch’s focus on bottom-line process improvement in the core businesses. GE
CEO Jeff Immelt has cited several new behaviors critical in the search for new billion dollar opportunities:
identify and build capabilities and processes around growth, ambidextrous leadership (sustained excellence in
both growth and cost control), external focus, risk taking, and domain expertise. 7
Still, in many companies HR policies and programs are anchored to the core business and designed to develop
leaders who can manage existing lines efficiently. Compensation plans further discourage innovation and risk-
taking by paying for short-term financial performance. Given this, it is not surprising that innovation and growth
often fall short of expectations. Or, in some of the other companies we have observed, this important NGP work
is outsourced because of gaps in the leadership talent pipeline.

6 Based on comments from Robert J. Steven “Forging Full-Spectrum Leaders” at the Leadership Excellence
Summit at the US Naval Academy in Annapolis on July 18th and “How admired companies find the best
talent” by Anne Fisher, Fortune senior writer for CNN Money, Feb. 23, 2006.
7 Colvin G (2006). “Q & A: On the Hot Seat,” Fortune (Nov. 27).

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HR’s Role in Organization Design and Change

The HR agenda for NGP organization design reflects the dynamics of platform innovation. NGPs require people,
processes, and structures very different from those of existing business units. In addition, the management
styles, rewards, and purposes of NGPs are intrinsically dissimilar from the core. The challenge of establishing
growth as a permanent, crucial organizational element in a business is very different from managing existing
product and service lines.
Our experience and research has identified building blocks that support this difference and help companies
move to a more agile organization that can fill the pipeline with new platforms and support development:
1. A mission-specific team that includes functional and experiential diversity is essential for creation of
NGPs;
2. A robust internal and external social network must be available to test trends and ideas;
3. The team must have latitude to explore any platform consistent with the platform logic.
4. The NGP leader’s role is to drive new platform growth by leveraging the company platform logic,
prioritizing domains, and identifying platforms;
5. Disciplined, systematic, and repeatable processes for developing and executing NGPs are required;
6. Infusion of new insights and ideas must be translated into new learning and behaviors; and
7. Investment and stage-gate decision-making principles are explicit and agree.
Again, these kinds of process and procedural changes are not without serious risks:
1. Companies focused solely on efficiencies may fail to preserve the capability to create new growth
platforms;
2. Failure to appoint a dedicated team leaves idea development to chance, and funding subject to
quarterly business unit performance. Furthermore, developing insight, “imagineering,” and venture
investing defaults to executives skilled at operating going concerns rather than individuals whose work
and know how is in building future legacy businesses;
3. Failure to put a senior and credible executive in charge of NGPs will compromise the ability to bring
the enterprise assets to bear in the development of new market opportunities; and
4. Limiting platform exploration to protect an existing business unit will suppress innovation.
Companies committed to material growth, such as Medtronic and P&G, put in charge a highly respected leader,
a chief growth officer, to establish the capabilities to develop and execute a pipeline of new growth platforms
to close the enterprise growth gap. In fact, Heidrick & Struggles International Inc.’s Jane M. Stevenson, who
heads the firm’s global search practice for chief marketing officers, says she has seen a fourfold increase in
these kinds of CGO positions in the last three years, with most of that growth coming in the last 18 months.8
Additionally, these high growth companies have learned that organization design is an essential component in
the development and execution of NGPs. Some NGP units utilize resources in the company in the development
and execution of NGPs; others are more self-sufficient and have wider authority.
At Procter & Gamble, the FutureWorks organization is organized by domain, platform, and project. Within each
domain, there might be two potential new growth platforms and two to four projects within each platform.
Project management includes planning, pressure testing the business models, prototyping, and incubating
NGP ideas, products, and businesses. FutureWorks’ platform teams are users of corporate resources
including: trends related to scenario planning and defining the “market landscape,” R&D, corporate venture

8 “A Dawn of the Idea Czar,” Business Week, April 10, 2006.

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capital, acquisitions, and related activities. P&G also relies on Connect and Develop, a community for
connecting with the world’s most inspired minds and developing products that improve consumers’ lives. As
CEO AG Laffley puts it, he wants P&G to be known as “the company that collaborates — inside and out — better
than any other company in the world.” According to P&G’s Larry Huston and Nabil Sakkab, in 2006: 9

[M]ore than 35 percent of new products in market have elements that originated from outside P&G, up 
from about 15 percent in 2000. 45 percent of the initiatives in the product development portfolio have 
key elements that were discovered externally. Through Connect and Develop—along with 
improvements in other aspects of innovation related to product cost, design, and marketing—R&D 
productivity has increased by nearly 60 percent while R&D investment as a percentage of sales is down 
from 4.8 percent in 2000 to 3.4 percent in 2006. The innovation success rate has more than doubled, 
while the cost of innovation has fallen also. In the last two years, P&G launched more than 100 new 
products for which some aspect of execution came from outside the company. 

Unfortunately, this sort of pushing of boundaries has yet to affect HR: Only 6.7 percent of respondent in the
HRPS/i4cp survey said that HR plays a “large” role in creating social networks that tap into talent and ideas
outside of the organization. This needs to change if HR is going to gain influence in NGP.
Alternatively, at Medtronic, when Bill George was CEO and Glen Nelson was the chief growth officer, the office
of the CEO included the CEO, COO, and CGO. The CGO was responsible for growth beyond the core businesses.
Reporting to Nelson were all planning and execution functions including research and development, strategy,
mergers and acquisitions, corporate venture initiatives, and new business/platform development. HR was
instrumental in identifying the attributes for these key positions and helping to screen candidates.
Furthermore, as Medtronic acquired companies, HR identified new talent to contribute their experience in
developing and building NGPs. From 1984 to 2004, the company grew at 18 percent per year, earnings at a
CAGR of 20 percent, and market capitalization at 30 percent per year.
Insights from a major chemical
company show how HR can help Questions without answers leave the organization hoping
facilitate organization change to for new growth but rewarding core business results. HR
spur growth. The HR director must help frame and resolve these challenges and align
worked closely with the CEO to
profile the chief growth officer the organization for both core business and NGP growth.
and the team. Three high-
performing candidates were identified for the CGO: Two were business unit presidents and succession
candidates for the chief executive position a few years down the road. The third was a senior marketing
manager with considerable entrepreneurial experience. “This will be a great opportunity,” indicated one of the
candidates in the formal interview process with the Executive Team. “If I am selected for this position, I will get
to shape the future of the company and develop the roadmap that will get us to that future.”
In addition to developing the mission of the new organization and goals for the leader, the HR director worked
with a leading psychological testing company to identify the desired attributes of a candidate and test each
candidate. Feedback was provided to the CEO, HR director, and the candidate. The purpose was not to screen
candidates in or out, but rather to identify and discuss areas that could warrant development or improvement
as the candidate moved into his or her new responsibilities. Once the candidate was selected, the HR director
worked closely with the new CGO to profile the characteristics desired on a team that would work on different
challenges than they had faced in their core business. In aggregate, they knew they wanted a team that was

9 Huston L & Sakkab N (2006). “Connect and Develop: Inside Procter & Gamble’s New Model for Innovation,”
Harvard Business Review, 84, March.

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diverse, curious, constructively dissatisfied, and had credibility within the organization. The HR director actively
sought out and screened a mix of individuals from different functions and geographical locations. NGPs had
been identified as an important CEO priority, and the team was mobilized in a matter of weeks.
In the course of this work, HR helped the CEO successfully navigate a number of sensitive issues, including:
1. Could a business unit leader be extracted from his unit at a time the unit was making an acquisition
and planning the critical integration phase?
2. How could they mitigate the risks, perceived by some, of taking high potential managers and scientists
out of the mainstream of the business?
3. What if the NGP work was not immediately successful or the team under-resourced? Will the unit be
terminated as cost pressures arise (as has happened in the past with innovation initiatives)?
4. What compensation package would reward the creation of NGPs but not put the unit as an outlier to
the core business?

We have heard these questions repeated across companies and industries. Questions without answers leave
the organization hoping for new growth but rewarding core business results. HR must help frame and resolve
these challenges and align the organization for both core business and NGP growth.

Past and Future HR Agendas

In the past, HR was aligned to the CEO agenda around efficiencies and process and product innovation. HR
priorities focused heavily on enabling the core business to support the CEO and Executive Team in maximizing
earnings. It is not surprising that aligning to the core businesses, improving the company’s brand as a
desirable, viable place to work, emphasizing long-term workforce planning, outsourcing non-core work and,
more recently, reforming pension management topped most HR agendas.
Today, Wall Street is discounting cost and productivity gains, and Boards are looking for growth to deliver
increased share price and market capitalization. This means that HR priorities are going to change. Of the
HRPS/i4cp survey respondents, 66 percent agree that emphasis on growth in their organization is changing
what it means to be “strategic HR,” and two-thirds believe HR is not responding fast enough to the strategic
challenges related to profitable new growth.
Earlier, we made the case that the most complicated part of growth resides inside the organization:
1. Is there an executive growth gap?
2. Is the leadership team unified around growth goals and the path to them?
3. Is the organization designed to achieve the growth that has been identified?
4. Is the source of growth clear?
5. Can the innovation process deliver new businesses that will achieve the growth goals?
To answer these questions, many HR executives have begun to realign their agenda and, in the process, have
identified five key areas for retooling to meet the organization challenges related to profitable new growth (the
percentage indicates survey respondents who indicated that retooling was required):
1. Developing new learning programs, leading to new executive team behaviors (67.7%);
2. Designing and staffing the growth-related organization (65.8%);
3. Helping leaders to frame the growth challenge for the organization (64.6%);
4. Redefining the role, work, and value added of top leaders in the growth agenda (55.4%);
5. Shifting the mindset from lines of business to well-defined, less confined domains (50.0%).

Retooling for NGPs is an HR imperative

Early signs hold promise. HR teams in some companies such as GE and Lockheed Martin are revamping their
leadership development programs to include the leadership role and value-add in identifying, selecting, and

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building NGPs. Key skills and behaviors identified are agility of mind, making connections not made by others,
seeing how things could work in a whole different way (e.g., reapplication of capabilities), higher external focus,
and developing a greater sense of urgency and risk taking.
On the organization front, P&G, Medtronic, and other companies’ HR teams are designing new growth
organizations with new roles, responsibilities, and compensation systems to ensure ideas do not remain buried
in their organizations and that talent and knowledge are leveraged across the businesses and the network.
Beyond these visible roles, strategic HR leaders will need to push the boundaries of their influence. Here the
prognosis is less clear. We believe a key challenge for HR will be to recognize and reconcile the differences in
mindset in the core business and the less well-defined and less-confined domains and work in the NGP world.
To do this they will have to start by looking in the mirror. Who in their HR organization has experience in
building new businesses and ventures, operating external networks, and supporting centers of excellence for
growth? Although HR has many of the core competencies required (talent acquisition, leadership development,
succession planning, organization design, and compensation), these skills will have to be applied in new ways.
As the HRPS/i4cp survey suggests, two-thirds of HR organizations are not responding fast enough to the
strategic challenges related to profitable new growth. If that is the case, these skills can be “brokered” in the
short run via leading-edge thinkers, networking, and, for selected HR leaders, immersion in the world of the
company’s best business builders.
Looking forward, the HR agenda will change because the CEO agenda has shifted to the top line. Sustained,
steady top-line growth, including the creation of new growth platforms, has real implications for HR in
innovation, leadership, and organization design. Either HR will serve a critical role in the development of NGPs
or the business will move along without “strategic HR” leadership.

Biographical Sketches
Donald L. Laurie is managing partner of Oyster International LLC. He works with CEOs and executive teams on
leadership, organization design, governance, and the building of new growth platforms. He led the Harvard
Business School, INSEAD, and Oyster International research: The CEO Agenda and Growth. He co-authored
“Creating New Growth Platforms” in the Harvard Business Review in May 2006 and is the co-author of “The
Work of Leadership,” a Harvard Business Review Classic, in 1997. Don is author of The Real Work of Leaders
and Venture Catalyst: the five strategies for explosive corporate growth. He is a frequent speaker at CEO
summits, Business Week roundtables, and such high-profile venues as the World Economic Forum in Davos,
Switzerland.
Richard Lynch (Richard.Lynch@Accelare.com) is a Vice President at Accelare, Inc. where he works with clients
to identify, source and strengthen strategic capabilities. He is the lead author of The Capable Company:
Building the capabilities that make strategy work (Blackwell, 2003), Measure Up! How to Measure Corporate
Performance (Blackwell, 2nd ed., 1995), and Corporate Renaissance: The Art of Reengineering (Blackwell,
1994).

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